PROJECT SCOPE MANAGEMENT

WHAT IS PROJECT SCOPE MANAGEMENT?

Scope refers to all the work involved in creating the products of the project and the processes used to create them Project scope management includes the processes involved in defining and controlling what is or is not included in the project The project team and stakeholders must have the same understanding of what products will be produced as a result of a project and what processes will be used in producing them

PROJECT SCOPE MANAGEMENT PROCESSES

Initiation:

beginning a project or continuing to the next phase Scope planning: developing documents to provide the basis for future project decisions Scope definition: subdividing the major project deliverables into smaller, more manageable components Scope verification: formalizing acceptance of the project scope Scope change control: controlling changes to project scope
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PROJECT INITIATION: STRATEGIC PLANNING AND PROJECT SELECTION

The first step in initiating projects is to look at the big picture or strategic plan of an organization Strategic planning involves determining long-term business objectives IT projects should support strategic and financial business objectives

IDENTIFYING POTENTIAL PROJECTS

Many organizations follow a planning process for selecting IT projects First develop an IT strategic plan based on the organizations overall strategic plan Then perform a business area analysis Then define potential projects Then select IT projects and assign resources

INFORMATION TECHNOLOGY PLANNING PROCESS

METHODS FOR SELECTING PROJECTS

There are usually more projects than available time and resources to implement them It is important to follow a logical process for selecting IT projects to work on Methods include focusing on broad needs, categorizing projects, financial methods, and weighted scoring models

FOCUSING ON BROAD ORGANIZATIONAL NEEDS

It is often difficult to provide strong justification for many IT projects, but everyone agrees they have a high value It is better to measure gold roughly than to count pennies precisely Three important criteria for projects:

There is a need for the project There are funds available Theres a strong will to make the project succeed

CATEGORIZING IT PROJECTS

One categorization is whether the project addresses

a problem an opportunity, or a directive

Another categorization is how long it will take to do and when it is needed Another is the overall priority of the project

FINANCIAL ANALYSIS OF PROJECTS

Financial considerations are often an important consideration in selecting projects Three primary methods for determining the projected financial value of projects:

Net present value (NPV) analysis Return on investment (ROI) Payback analysis

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NET PRESENT VALUE ANALYSIS

Net present value (NPV) analysis is a method of calculating the expected net monetary gain or loss from a project by discounting all expected future cash inflows and outflows to the present point in time Projects with a positive NPV should be considered if financial value is a key criterion The higher the NPV, the better

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NET PRESENT VALUE EXAMPLE

Excel file

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RETURN ON INVESTMENT

Return on investment (ROI) is income divided by investment

ROI = (total discounted benefits - total discounted costs) / discounted costs

The higher the ROI, the better Many organizations have a required rate of return or minimum acceptable rate of return on investment for projects

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PAYBACK ANALYSIS
Another important financial consideration is payback analysis The payback period is the amount of time it will take to recoup, in the form of net cash inflows, the net dollars invested in a project Payback occurs when the cumulative discounted benefits and costs are greater than zero Many organizations want IT projects to have a fairly short payback period

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NPV, ROI, AND PAYBACK ANALYSIS FOR PROJECT 1

Excel file
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NPV, ROI, AND PAYBACK ANALYSIS FOR PROJECT 2

Excel file
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WEIGHTED SCORING MODEL

A

weighted scoring model is a tool that provides a systematic process for selecting projects based on many criteria
First identify criteria important to the project selection process Then assign weights (percentages) to each criterion so they add up to 100% Then assign scores to each criterion for each project Multiply the scores by the weights and get the total weighted scores

The

higher the weighted score, the better See What Went Right? for a description of how a mortgage finance agency uses a weighted scoring model for IT projects
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SAMPLE WEIGHTED SCORING MODEL FOR PROJECT SELECTION

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Excel file

PROJECT CHARTERS
After deciding what project to work on, it is important to formalize projects A project charter is a document that formally recognizes the existence of a project and provides direction on the projects objectives and management Key project stakeholders should sign a project charter to acknowledge agreement on the need and intent of the project

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SCOPE PLANNING AND THE SCOPE STATEMENT

A scope statement is a document used to develop and confirm a common understanding of the project scope. It should include
a project justification a brief description of the projects products a summary of all project deliverables a statement of what determines project success

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SCOPE PLANNING AND THE WORK BREAKDOWN STRUCTURE

After completing scope planning, the next step is to further define the work by breaking it into manageable pieces Good scope definition

helps improve the accuracy of time, cost, and resource estimates defines a baseline for performance measurement and project control aids in communicating clear work responsibilities

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THE WORK BREAKDOWN STRUCTURE

A work breakdown structure (WBS) is an outcomeoriented analysis of the work involved in a project that defines the total scope of the project It is a foundation document in project management because it provides the basis for planning and managing project schedules, costs, and changes

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SAMPLE INTRANET WBS ORGANIZED BY PRODUCT

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SAMPLE INTRANET WBS ORGANIZED BY PHASE

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APPROACHES TO DEVELOPING WBSS

Using guidelines: Some organizations, like the DOD, provide guidelines for preparing WBSs The analogy approach: It often helps to review WBSs of similar projects The top-down approach: Start with the largest items of the project and keep breaking them down The bottom-up approach: Start with the detailed tasks and roll them up

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SCOPE VERIFICATION AND SCOPE CHANGE CONTROL

It is very difficult to create a good scope statement and WBS for a project It is even more difficult to verify project scope and minimize scope changes Many IT projects suffer from scope creep and poor scope verification

FoxMeyer Drug filed for bankruptcy after scope creep on a robotic warehouse Engineers at Grumman called a system Naziware and refused to use it

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READING ASSIGNMENT
Basic Principles for Creating WBSs Factors Causing IT Project Problems Suggestions for Improving User Input Suggestions for Reducing Incomplete and Changing Requirements

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